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> Eighty-four percent of respondents said blockchain could reduce the risk a trade won’t settle and the time that process takes, while 74 percent said it could

> Eighty-four percent of respondents said blockchain could reduce the risk a trade won’t settle and the time that process takes, while 74 percent said it could alleviate the chance your counterparty to a trade won’t make good on the deal. Karma to anyone who can explain this to me. How does the blockchain reduce counterparty risk. The counterparty can either produce the required shares or they can't. And to be honest, currently cash equities settle on a T + 3 days basis and options settle on a T + 1 day basis. Most people view that as a feature not a bug. If the markets wanted instantaneous settlement of cash equities they could do it, no one does.

blockchin 11y ago
Any asset can be created on top of the bitcoin with meta-layers such as CounterParty [1] (which is what Symbiont is basing their solution off of) Colored coins [2] or a hybrid approach [3] recently demoed by Deloitte [1] http://counterparty.io/ http://counterparty.io/ [2] http://coloredcoins.org/ http://coloredcoins.org/ [3] http://rubixbydeloitte.com/ http://rubixbydeloitte.com/ (These platforms have received recent backing by NYSE and NASDAQ, respectively) Assets created through Colored coins must use a gateway in a quasi-centralized fashion, however Assets created via counterparty can be traded p2p without a middleman, as they can be natively escrowed by a protocol which enforces atomic swaps and a fair deterministic order matching engine. DTCC's status quo is T+3(days), if there are trades that can be settled on a blockchain, that can be reduced to T+1(hr) or less. IMO Bitcoin is a horribly inefficient trading platform, (aside from the 'advantage' of HFT bots being on equal footing as retail investors) but an ideal settlement/netting/clearing layer. As a minimum there are huge transparency gains to be gleaned. The introduction of Smart contracts potentially opens up the field for a whole new paradigm of smart securities, as well. There are a whole host of established entities researching on blockchain securitization and/or smart contracts at the moment, a subset of them are below: CBW Bank ANZ Westpac Commonwealth Bank of Australia BNY MELLON LHV Bank Barclays UBS Goldman Sachs ABN Amro ING RoboBank SWIFT Santander Standard chartered DBS USAA BBVA KPMG InfoSys Finacle CitiBank DTCC Deutsche Borse Markit EuroCCP CME
- chollida1 11y ago
  I appreciate the effort but I can't see how this in anyway answer's the question I asked below. > How does the blockchain reduce counterparty risk. The counterparty can either produce the required shares or they can't. Let's simplify. I buy 100 MSFT from you. How does the blockchain help settle this trade. At some point I still need to deliver 100 shares to you.
  - blockchin 11y ago
    In a simplified way you can use the Bitcoin scripting system to make binding bids and offers without needing a central exchange. And you can achieve person to person atomic swaps of currency for securities – delivery versus payment – without needing a custodian. Let's assume MSFT shares are represented as specially encoded satoshis. Below you can find is examples of (fictional) MSFT shares [1] [2] being represented on the blockchain in that way. I'll use an example of CounterParty, which is a meta-layer on the blockchain. The Counterparty protocol acts as an escrow service, and thereby eliminates counterparty risk from the exchange of assets. [1] http://blockscan.com/assetInfo/MSFT http://blockscan.com/assetInfo/MSFT [2] https://coindaddy.io/search?network=xcp&q=MSFT https://coindaddy.io/search?network=xcp&q=MSFT Now that MSFT asset is stored on the bitcoin blockchain. Actually it is encoded as an OP_RETURN script in the transaction, an breakdown of such an asset you can see here: 434e545250525459|00000000|000000000004fadf000000174876e800000000000000000000000000 | | | | | └── All of this is the operation data (maximum 28 bytes) | └──────────────── This is the transaction type identifier (4 bytes) └───────────────────────────────── The string CNTRPRTY in hexadecimal (8 bytes) A breakdown of the sending of such an asset on the bitcoin blockchain: 000000000004fadf|000000174876e800 | | | └───── quantity (8 bytes) └────────────────── asset name (8 bytes) There's some further reading in the links below in more depth than I could hope to go into here: http://counterparty.io/docs/counterparty_features/#overview http://counterparty.io/docs/counterparty_features/#overview http://counterparty.io/docs/counterparty_features/#protocol-based-trustless-escrow http://counterparty.io/docs/counterparty_features/#protocol-...
    - 11y ago

blockchin 11y ago

Any asset can be created on top of the bitcoin with meta-layers such as CounterParty [1] (which is what Symbiont is basing their solution off of) Colored coins [2] or a hybrid approach [3] recently demoed by Deloitte [1] http://counterparty.io/ http://counterparty.io/ [2] http://coloredcoins.org/ http://coloredcoins.org/ [3] http://rubixbydeloitte.com/ http://rubixbydeloitte.com/ (These platforms have received recent backing by NYSE and NASDAQ, respectively) Assets created through Colored coins must use a gateway in a quasi-centralized fashion, however Assets created via counterparty can be traded p2p without a middleman, as they can be natively escrowed by a protocol which enforces atomic swaps and a fair deterministic order matching engine. DTCC's status quo is T+3(days), if there are trades that can be settled on a blockchain, that can be reduced to T+1(hr) or less. IMO Bitcoin is a horribly inefficient trading platform, (aside from the 'advantage' of HFT bots being on equal footing as retail investors) but an ideal settlement/netting/clearing layer. As a minimum there are huge transparency gains to be gleaned. The introduction of Smart contracts potentially opens up the field for a whole new paradigm of smart securities, as well. There are a whole host of established entities researching on blockchain securitization and/or smart contracts at the moment, a subset of them are below: CBW Bank ANZ Westpac Commonwealth Bank of Australia BNY MELLON LHV Bank Barclays UBS Goldman Sachs ABN Amro ING RoboBank SWIFT Santander Standard chartered DBS USAA BBVA KPMG InfoSys Finacle CitiBank DTCC Deutsche Borse Markit EuroCCP CME

chollida1 11y ago
I appreciate the effort but I can't see how this in anyway answer's the question I asked below. > How does the blockchain reduce counterparty risk. The counterparty can either produce the required shares or they can't. Let's simplify. I buy 100 MSFT from you. How does the blockchain help settle this trade. At some point I still need to deliver 100 shares to you.
- blockchin 11y ago
  In a simplified way you can use the Bitcoin scripting system to make binding bids and offers without needing a central exchange. And you can achieve person to person atomic swaps of currency for securities – delivery versus payment – without needing a custodian. Let's assume MSFT shares are represented as specially encoded satoshis. Below you can find is examples of (fictional) MSFT shares [1] [2] being represented on the blockchain in that way. I'll use an example of CounterParty, which is a meta-layer on the blockchain. The Counterparty protocol acts as an escrow service, and thereby eliminates counterparty risk from the exchange of assets. [1] http://blockscan.com/assetInfo/MSFT http://blockscan.com/assetInfo/MSFT [2] https://coindaddy.io/search?network=xcp&q=MSFT https://coindaddy.io/search?network=xcp&q=MSFT Now that MSFT asset is stored on the bitcoin blockchain. Actually it is encoded as an OP_RETURN script in the transaction, an breakdown of such an asset you can see here: 434e545250525459|00000000|000000000004fadf000000174876e800000000000000000000000000 | | | | | └── All of this is the operation data (maximum 28 bytes) | └──────────────── This is the transaction type identifier (4 bytes) └───────────────────────────────── The string CNTRPRTY in hexadecimal (8 bytes) A breakdown of the sending of such an asset on the bitcoin blockchain: 000000000004fadf|000000174876e800 | | | └───── quantity (8 bytes) └────────────────── asset name (8 bytes) There's some further reading in the links below in more depth than I could hope to go into here: http://counterparty.io/docs/counterparty_features/#overview http://counterparty.io/docs/counterparty_features/#overview http://counterparty.io/docs/counterparty_features/#protocol-based-trustless-escrow http://counterparty.io/docs/counterparty_features/#protocol-...
  - 11y ago